Marketing Strategy MBA299M Introduction

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Marketing StrategyMBA299MIntroduction

• August 30
• Miguel Villas-Boas

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1. Palm Computing

• April 1996 Launch of Palm Pilot
• 1,000 software developers
• September 1996 Microsoft launches Windows CE
• October 1997 one million units sold
• 66 market share
• January 1998 Microsoft launches Windows CE 2.0
  (less than 20 market share)
• March 1998 Palm III development for Palm V and
  VII
• November 1998 Founder Jeff Hawkins and Palm
  President Donna Dubinsky left to start Handspring
  because they felt they could not compete with
  Microsoft within 3Com. Handspring to use Palm OS

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Palm Computing

• September 1999 Handspring launches Visor. In
  first 3 weeks gets to 27 market share. Palm OS
  at 76 of market.
• April 2000 Microsoft launches Pocket PC. (Close
  to 1 billion in investment). 1/9 ratio to Palm
  sales by June 2000.
• Palm continuing to cultivate software
  developers.
• June 2001 Slow down in US economy. Palm has loss
  of 150 M, and stock under 2.
• September 2001 Microsoft launches Pocket PC 2002
  gets 23 market share
• June 2002 Palm Palm OS was standard most
  users, most software, most hardware options, most
  manufacturers. 145,000 software developers, 2,500
  added each week.

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Palm Computing

• Palms strategy
• strengthen network effects
• get a head start
• manage expectations
• Microsofts strategy
• shape expectations?
• redefine market?
• Can two players survive?

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2. Components of Strategy

• Scope
• Breadth of strategic domain number and types of
  industries, product lines, market segments
• Objectives and Goals
• Desired level of accomplishment on one or more
  performance dimensions and growth
• Resources and their deployment
• Allocation of human, financial and other
  resources across businesses, markets, etc.
• Competitive advantage
• Distinctive competencies or strengths relative to
  competitors?
• Synergy
• exploit synergies across businesses and product
  markets

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Formulating and Implementing Marketing Strategy
External environment
Corporate objectives strategy
Business objectives strategy
Market opportunity analysis Environment
competitor analysis Industry dynamics Customer
analysis

• Formulate strategy for
• Market entry
• Growth markets
• Mature or declining markets

Implementation Control
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HP Strategy Statement

• Our strategy is to focus HPs inventive
  capabilities across three key dimensions of the
  emerging technology landscape
• Enabling intelligent, connected devices and
  environments
• Enabling an always-on Internet infrastructure
• Enabling a new generation of applications
  delivered as e-services.
• By understanding the relationship among these
  three, we can help transform the experiences
  people have with technology and the role it plays
  in business and life

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3. This Course

• How to make profit by meeting a need of a
  customer?
• Formulate and plan a marketing strategy
• Worry about dynamics and contingencies/uncertainty
  
• Methods Practice (computer simulation cases)
• Lectures

Segmentation Targeting Positioning Price Product D
istribution Communication
Environment Lack of information Competitors Custom
ers Suppliers
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Course structure

• First part Industry analysis
• Pricing
• New products
• Strategic segmentation
• Market dynamics
• Competition
• Markstrat Understanding customers
• RD and product development
• Market planning
• Marketing diagnostics
• Resource allocation
• Competition
• Customer loyalty
• Customer relationship management
• Wrap-up

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Markstrat

• Complex business simulation Manage a firm for
  eight periods, competing with different firms in
  an industry
• Team composition 3, 4 or 5, diversity, submit by
  September 15 (or earlier). Register at
  www.markstratonline.com, Course ID A40150.
• All students need to register. Download software
  version 1.05.
• Team meetings Wednesdays, first decision on
  September 29 with class time. Time pressure.
• Decisions Marketing research, positioning, RD,
  product design, product line, advertising,
  distribution, pricing.

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Course evaluation

• Markstrat (55) Firm performance
• First Markstrat report (due October 25)
• Final Markstrat report (due December 6)
• Individual case write-ups (any 3 cases, 10 each
  30)
• (Apple 9/1 Nestle 9/13, Sony car navigation
  9/20, American airlines 11/15, Brita 11/29, CMR
  entreprises 12/1)
• Class participation (15)

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4. Strategy Analogy to war?(Chinese Classical
Strategies of war circa 500 BC)

• IN STRATEGY IT IS IMPORTANT TO SEE DISTANT THINGS
  AS IF THEY WERE CLOSE AND TAKE A DISTANT VIEW OF
  CLOSE THINGS.
• THE IMPORTANT THING IN STRATEGY IS TO SUPPRESS
  THE ENEMY'S USEFUL ACTIONS BUT ALLOW HIS USELESS
  ACTIONS.
• TO KNOW THE TIMES MEANS TO KNOW THE ENEMY'S
  DISPOSITION IN BATTLE. BY OBSERVING THE SPIRIT
  OF THE ENEMY'S MEN AND GETTING THE BEST POSITION,
  YOU CAN WORK OUT THE ENEMY'S DISPOSITION.
• TO BECOME THE ENEMY MEANS TO THINK YOURSELF INTO
  THE ENEMY'S POSITION.
• TO PASS ON WHEN THE ENEMY IS AGITATED AND SHOWS
  AN INCLINATION TO RUSH, DO NOT MIND IN THE LEAST.
  MAKE A SHOW OF COMPLETE CALMNESS AND THE ENEMY
  WILL BE TAKEN IN BY THIS AND BECOME RELAXED.
  WHEN YOU SEE THAT THIS SPIRIT OF CALMNESS HAS
  BEEN PASSED ON, ATTACK STRONGLY.

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ART OF WAR SUN TZU (CIRCA. 500 BC)

• TO WIN WITHOUT FIGHTING IS BEST THE IDEAL
  STRATEGY IS TO MAKE CONFLICT UNNECESSARY.
• THERE ARE ONLY FIVE NOTES IN THE MUSICAL SCALE,
  BUT THEIR VARIATIONS ARE SO MANY THAT THEY CANNOT
  ALL BE HEARD. THERE ARE ONLY TWO KINDS OF CHARGE
  IN BATTLE, BUT VARIATIONS ARE ENDLESS.
• ALL MEN CAN SEE THESE TACTICS WHEREBY I CONQUER,
  BUT WHAT NONE CAN SEE IS THE STRATEGY OUT OF
  WHICH VICTORY IS EVOLVED.
• TO UNFAILINGLY TAKE WHAT YOU ATTACK, ATTACK WHERE
  THERE IS NO DEFENSE. FOR UNFAILINGLY SECURE
  DEFENSE, DEFEND WHERE THERE IS NO ATTACK.
• THE RULE OF MILITARY OPERATIONS IS NOT TO COUNT
  ON OPPONENTS NOT COMING, BUT TO RELY ON HAVING
  WAYS TO DEAL WITH THEM.

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5. Industry Analysis

• The overall competitive activity facing an
  average firm is the interplay of five factors
• A. INTENSITY OF RIVALRY
• NUMEROUS, EQUALLY BALANCED COMPETITORS
• SLOW INDUSTRY GROWTH
• HIGH FIXED COSTS
• HIGH EXIT BARRIERS
• LACK OF PRODUCT DIFFERENTIATION
• COMPETITORS WITH DIVERSE VIEWS
• B. THREAT OF ENTRY
• ECONOMIES OF SCALE
• PRODUCT DIFFERENTIATION
• HIGH CAPITAL REQUIREMENTS FOR ENTRY
• ENTRY DETERRENT PRICES

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• C THREAT OF SUBSTITUTE PRODUCTS
• SUBSTITUTE INDUSTRY EARNS HIGH p
• RELATIVE PRICE-PERFORMANCE OF SUBSTITUTES
• SWITCHING COSTS
• D BARGAINING POWER OF THE BUYERS
• LARGE VOLUME PURCHASES RELATIVE TO THE SELLER'S
  SALES
• LOW SWITCHING COSTS FOR BUYER/UNDIFFERENTIATED
  PRODUCT
• ABILITY TO BACKWARD INTEGRATE
• PRODUCT UNIMPORTANT TO THE QUALITY OF THE
  BUYER'S OWN PRODUCTS
• BUYER INFORMATION
• E BARGAINING POWER OF THE SUPPLIERS
• SYMMETRIC TO THE CASE WITH BUYERS

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Conclusion

• Course overview and organization
• Components of strategy
• Analogy of war? Understand competitors
• Industry analysis
• Wednesday Case Apple Computer